A Time to Pay

by Kevin Taylor & r & & r & & lt;span class= "dropcap " & T & lt;/span & he Catholic Diocese of Spokane appears to be a week away from taking a significant, formal step to get out of bankruptcy and settle its clergy sex abuse scandal. On Feb. 1, attorneys representing the diocese are scheduled to file a disclosure statement with Judge Patricia Williams' federal bankruptcy court, explaining how a proposed $48 million reorganization plan would work to compensate creditors. Ten months ago, the list of creditors included 185 people claiming abuse by clergy. A hearing on next week's filing is scheduled for March 8.

The flurry of bankruptcy court scheduling follows the announcement early this month that the $48 million reorganization plan had been reached after months of mediation. Shortly after that, Kate Pflaumer, former U.S. Attorney General for Western Washington, was hired to review claims by sex abuse victims to determine money amounts. And then a cone of silence descended.

As much as anything, the imminent disclosure statement is meant as a chance for the diocese to assume responsibility, and for Bishop William Skylstad to show accountability for his decision to seek bankruptcy protection late in 2004 just as a sexual abuse complaint was three weeks away from trial.

In the meantime, the pool of claimants has nearly doubled from its original 75 to a current 140. (Some claims have been dismissed.) Catholics in the diocese's 81 parishes panicked when Judge Williams initially ruled all the parishes -- schools and churches -- were owned by the diocese and could be liquidated in the bankruptcy. Heart rates have returned to near normal as a second federal judge, ruling in an appeal by the diocese, was critical of Williams' ruling on parish ownership and sent it back for revision.

It appears, however, the prospect of setting a national precedent on civil law trumping church law on property ownership may be sidestepped. No parish properties are to be sold to cover the $48 million in the mediated reorganization plan.

Parishes are listed as contributing $10 million to the plan -- about half what they were expected to pay in a settlement offer floated just last February. Some parishes have opted for a greater obligation, one attorney says, with a subset of the parishes agreeing to pay an additional $5 million and a subset of the subset kicking in $1 million on top of that.

Roughly $20 million to $21 million (depending on interest) will be paid by insurance companies. Insurers initially balked at paying, saying the diocese knew of abuse by priests and did little about it, voiding the policies. But agreements were reached over the past year.

The diocese will raise the final $18 million by selling its downtown chancery, the bishop's modest house on the near north side and other properties.

How all these elements come together and, more important, where the money goes, is to be addressed in next week's filing of the disclosure statement, sources say.

"The purpose of the disclosure statement is to explain how this [reorganization plan] works," an attorney familiar with the bankruptcy says. The attorney did not wish to be identified, and neither did almost everyone contacted for this story. One exchange went like this:

"Oh, he's not going to call you back," the legal secretary for one of the many attorneys representing one of the many parties in the bankruptcy told The Inlander -- with good humor -- last week. "You know he likes to talk to reporters, but in this case not only can't he talk, he can't tell you he can't talk."

"There is no quote, gag order, unquote. There is limited information," says Judge Gregg Zive, the chief federal bankruptcy judge in Reno who spent about six months working with the disparate parties and their sometimes bitter disagreements to mediate the reorganization plan.

"This is a very difficult situation because of the type of conduct involved, because the church is involved, the variety of parties and interests and that you have limited assets and complex issues," Zive says. "There are difficult emotional and legal issues. If these parties hadn't arrived at a consensual resolution, they'd be in litigation for years."

To keep the hard-won consensus from blowing up, Zive strongly urged all parties to zip their lips. "There is a self-imposed gag order," he says, at least until the disclosure statement is out.

"What creditors want to see, generally, in Chapter 11 is how is my claim being treated, how much am I getting paid, and when," Zive says. "The disclosure statement ... is what enables a hypothetical investor to make an informed judgment about a plan."

Should Judge Williams accept the disclosure statement in March, the bankruptcy would proceed to hearings -- so far scheduled for April 24-25 -- to determine if the reorganization would be accepted.

If so, some attorneys who have worked exclusively on this case for more than two years say the diocese could begin to emerge from bankruptcy by mid-summer.

Chapter and Verse

Skylstad, despite heavy criticism, has insisted Chapter 11 bankruptcy was the only fair way to approach the mounting lawsuits and the possibility of settlements or jury awards that could put the existence of the diocese at risk.

Spokane is a poor diocese, he says, without the reserve funds, investment funds and hot properties that have helped other dioceses around the country meet large settlements in similar sex abuse scandals.

"At some point, you have to look at the reality of what's there," one attorney for claimants says. "This is a very traumatic experience for the victims."

In the weeks prior to seeking bankruptcy protection late in 2004, the diocese listed roughly $11 million in assets against an estimated $81 million in liabilities, including $76 million in sex abuse claims.

The bankruptcy proceedings are just entering their third year, and critics rage that Skylstad and his attorneys are simply stalling, driving up attorney fees and delaying justice for sex-abuse victims. But it seems fair to say the bishop needed some tool to help achieve what he has said to be his dual missions -- provide just compensation for victims and make sure the diocese can still serve area Catholics.

Since the bankruptcy filing, priests in the diocese -- who earn $1,200 a month -- have taken a monthly $100 pay cut. Their retirement fund has been raided. And, according to accounts in the Seattle Times last summer, Skylstad has reached into his own pocket to purchase missals distributed to prisoners in the diocese's prison outreach program because funding for many programs has been cut.

In addition, the diocese has seized control of the diocesan savings and loan, where the 81 parishes deposit funds raised by members to build or maintain their churches. The move infuriated many parishioners, just as it did when the Tucson Diocese did the same thing during its bankruptcy proceedings.

Since emerging from bankruptcy Tucson has incorporated its parishes as 501(c)(3) corporations, and it's likely the same will happen here.

It's About Money

The level of trust and consensus needed to reach a mediated reorganization plan took so much effort that nobody wants to be the one to screw it up by discussing it in the media -- thus the high degree of silence, a number of parties and Zive say.

Attorneys are prohibited from telling clients if the plan is good or bad at this point, but they can tell clients how the thing works. Two attorneys (representing different interests) offer the same outline here.

There are essentially four funds to compensate victims of sex abuse, based on criteria such as credibility of the claim, the extent of the abuse, the impact of the trauma on a person's life. These funds range from a "convenience fund" with payouts up to $15,000; a "compromise fund" (such as there was in the Tucson Diocese bankruptcy settlement) with payments of $45,000; a "matrix fund" with four levels for victims of the most terrible abuse.

Compensation here will vary, but if the plan is similar to Tucson's, people who suffered the worst abuse as children may be awarded compensation well into middle six-figure range. Some settlements in Tucson reached $600,000. And finally there is a "litigation fund" with two subsets for those who choose to take their claims to court.

But even large settlements should be measured against decades -- in many cases 40 years -- of someone living with the shame, the secrecy, the anger and the confusion of having been molested as a child by a priest, one of the victims in Spokane says.

"Money is not going to make anybody better," he says. "But in this culture, money is a way we assess damage."

When victims met during mediation, "Some people said, 'I want Bishop Skylstad to personally apologize to me.' I said, "You want what?'" the victim asks, incredulously. Citing years of lies, denials and lengthy battles to have his experience accepted by officials in the diocese, he adds, "I'm not going back to church. I want them to feel the sting. Not for the sake of revenge, but so they'll never attempt a cover-up again. Or give molesters in their ranks free rein."

It's Not About Money

A number of people involved in the mediated reorganization plan hail the "non-economic" agreements as essential to any settlement. Skylstad has agreed to a number of conditions, including posting the names of all known abusers; traveling to parishes where abuse occurred to apologize; allowing some victims, if they choose, to address congregations in church and to seek the removal of time limits on criminal prosecution of child sexual abuse.

"I am pleased about the promise to support elimination of the statutes of limitation," says former Spokane County Prosecutor Don Brockett, who has become a radicalized Catholic since learning children who were friends of his own children were among those abused at Assumption Parish by Spokane's most notorious abusive priest, Patrick O'Donnell.

Brockett has pushed legislators to sponsor bills removing time limits on some child sex crimes. One cleared the House last year before expiring without a vote in a Senate committee. Spokane Rep. John Ahern has introduced a similar measure, HB 1320, this session, and Brockett says he's checked with the Washington Conference of Catholic Bishops and says he was told the group intends to make good on Skylstad's promise to lobby for the reform.

The non-economic agreements "are literally unprecedented," says David Clohessy, director of the national chapter of the Survivors Network of those Abused by Priests. Clohessy remains a harsh critic of Skylstad and other bishops, but he says that to agree to tell people abuse happened, name the abusers and apologize, are significant steps toward public outreach.

The tragedy, Clohessy says, is that it took bankruptcy negotiations "to force a shepherd to do exactly what Jesus said in the first place, go forth and help the lost sheep. It's painful to me how little most survivors expect and ask for."

Bitter Pills

When it appeared parish properties might be liquidated to help pay abuse victims, Catholics were galvanized by fear and anger. Sadly, there has been a persistent vocal minority who see the sex abuse victims as whiny losers who should "just get over it."

This is the sort of teeth-bared, hackles-raised growling that crops up when parties with limited means are asked to pay large sums. There are an estimated 93,000 Catholics in the Spokane dioceses' 81 parishes, compared to 350,000 in Tucson's 74 parishes.

Here, an estimated 26,000 households are expected to shoulder the $10 million burden. And it's actually more than that. The properties being sold: Who raised the money to buy them? If the properties are replaced in the future, who pays for that?

Already, say those familiar with parish collections, parishioners are marking their checks "For Parish Use Only." There are whispers that some parishes are at least tempted to "hide" money instead of turning it all over to the diocese where it could wind up frozen like the savings and loan fund.

Skylstad strives to address these fears, even as he has come under fire from many sides during the last two years.

"I am very sorry that the parishes will have to carry the burden of $10 million," he writes in a recent letter posted on the diocesan Web site. "It pains me personally that the assets of the diocese are all gone and that our cemeteries and other institutions must take money from their missions to fund this plan. But I believe this plan makes it possible to continue our mission. We will limp at the beginning, but we will continue to live and preach the Gospel."

And Skylstad, who is also the president of the U.S. Conference of Catholic Bishops, has frequently apologized for the abuse that has scandalized and damaged the church across the country.

"During the past four years, we as a diocesan family have been through a painful and difficult experience as we have come to acknowledge the large number of victims of sexual abuse, primarily at the hands of clergy," he writes. "We ... must especially have a sense of compassion for the victims. Those who are perpetrators also need our prayers. The consequences of sin and weakness are never easily dealt with. I pray that we will continue to deal honestly with our past."

Statements such as these -- and Skylstad delivers them with consistency and frequency -- are much appreciated, but they may not be enough. An astonishing variety of people -- from parish functionaries to Catholics radicalized by the scandal and the bankruptcy, to victims who lost their faith, to attorneys on every side of the fight -- have expressed a sense that bigger changes are needed.

One attorney who represents one of the smaller pools of claimants says, "This has been troubling to deep believers, and the reasons are many-fold. One is the structure of the church is extremely controlling and dictatorial," he says. "The parishes are paying a lot of money to help the diocese get this behind them, but how are they reconciling paying all this money and what are they doing about change?"

Brockett adds: "Unless people in the parishes stop being enablers and demand a change in the hierarchal structure, it's never going to change."

"Victims are not happy," with the proposed reorganization plan, says Molly Harding, a leader in the Spokane chapter of SNAP. And the unhappiness has little to do with the money, she says.

Harding says she was raped by a priest in Los Angeles 14 years ago. In all this time, she says the diocese there wrote letters to say they were sorry and would pray for her, but did little else. It was only in the last week that her attorney, leveraging out documents in the wake of California's temporary widening of statues of limitations, found a document that the priest who abused her had just returned from a year in a New Mexico facility, the now defunct Servant of the Paracletes, where abuser priests were sent for rehab. She was never told this.

"There is so much secrecy. Parishioners are mad at victims. Truth does not come out. We have to have the records," Harding says.

The mediation in the Spokane case didn't get into release of documents because there may not be documents left to release, one attorney says.

"Weren't they hand-fed into the fireplace?" the attorney asks.

On the morning of Jan. 28, 2004, attorneys preparing a lawsuit against the diocese deposed then-Vicar General John Steiner under oath in a downtown law office. In testimony that often reads as if it were contentious, Steiner talked about (among many other topics) the existence of a "secret file cabinet" in the bishop's office containing records of sex abuse.

Steiner testified he helped Bishop Bernard Topel clean out this file cabinet. The resulting line of questioning included these exchanges:

Q. When you say you disposed of it, what did you do with it?

A. Literally I took it downstairs in the fireplace that is downstairs and burned it.

Q. Do you know whether there was any correspondence or documents or records pertaining to allegation of child sexual abuse within the Diocese?

A. I was not aware of any. I did not see any.

Q. Of the vast pile that you have indicated ... perhaps thousands of pages from what you describe, what percentage of pages did you read?

A. It was a Saturday afternoon adventure. Not very much.

& lt;span class= "dropcap " & A & lt;/span & nd it is just these sorts of occurrences that keep many Catholics from trusting the church hierarchy as the sex abuse scandals play out.

The Rev. Tom Doyle was an aide to the Apostolic Nuncio in Washington, D.C. (a sort of liaison between the Vatican and the U.S. Church), in 1985 and was one of three people assigned to investigate the rumblings of a sex abuse scandal in the clergy. The team issued dire warnings of the coming nightmare and offered suggestions for addressing the problem. The recommendations were treated almost dismissively by the bishops.

"It's about control. It's about sustaining the hierarchal monarchy. That's what it's about," Doyle says. "Here or there, there are bishops who are truly concerned and who are examples of the Apostles of Christ. The rest are just businessmen."